Cashflow is a major concern for small businesses during the coronavirus crisis. Many small businesses are currently facing a significant drop in revenue due to forced business closures, and as a result are running at or below breakeven.
There is no better time than now to investigate cost cutting strategies for reducing your business overheads, maintaining liquidity and potentially boosting profits during this challenging time.
Here are a few cost cutting tips for small businesses to consider:
If you cannot maintain your current workforce because your business has been severely affected by coronavirus, you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, plus any NI and pension contributions. The Job Retention Scheme is available for furloughed employees that were on your PAYE payroll on or before 19 March 2020. You can read more about how to claim here.
Reduce director drawings
Although not a popular option, in order to reduce monthly outgoings, it would be wise to reduce directors’ / owners’ drawings throughout this difficult period. You should also be considering the potential of a temporary reduction or cut of any additional staff benefits.
Take advantage of SBRR
Is your property’s rateable value less than £15,000? Do you only use one property? You may be eligible for small business rate relief. If you aren’t sure if you meet the criteria, click here to learn more.
Re-evaluate your traditional advertising budget
This is becoming a more popular option thanks to the vast array of online marketing options now available. Cutting traditional advertising doesn’t necessarily have to result in a reduction of new customer enquiries. By focusing your efforts on public relations, SEO techniques, social media and content marketing you can still reach your target audience at a fraction of the cost.
Reduce the risk of incurring bad debts
A client or customer who doesn’t pay on time can be a huge problem for your business. Ensure your collections are on time and that any outstanding balances are minimised. If you are short on staff to do the chasing, there are a variety of software platforms that can automatically chase up debtors for you.
Review unnecessary expenditure
When cost cutting for your small business it’s important to review all expenditure. Check your monthly subscriptions and projects and ask yourself the following questions…
‘Are we using this?’
‘Does this currently provide the business any value?’
‘Can we cancel or pause this without incurring significant costs or business disruption?’
Defer capital expenditure
You need to conserve your cash over the coming months, so it’s important to put a halt on capital expenditure.
Cost Cutting Support
Oldfield Advisory delivers practical, top level advice to businesses, helping them to become more profitable, generate more cash and be more valuable. For support and guidance in developing cost cutting strategies for your small business, please get in touch.